Navigating France & Monaco's VAT compliance

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Welcome to Yacht Charter Market, the weekly newsletter dedicated to the world of yacht charter.

In today’s newsletter:

• Top story: SOS Yachting France navigates you on VAT compliance in 2025

• Top charter updates: Discover the South-Pacific with Bundalong, Fox joins the French charter market, adventure onboard Seven Sins, cruise the Croation coast with Taleya, Creole sails the Western-Mediterranean

• Zairos: FX & Cross-Currency Solutions for Charter & Asset Payments

• Charter photo: @rayan_atb wakes up onboard This is It

TOP STORY

Chartering in France & Monaco: SOS Yachting France Navigates you on VAT compliance in 2025

Monaco and France are among the most popular yachting destinations in the west-Mediterranean. Yet it’s not only the scenic cruising routes and luxurious ports that attract visitors: their legal framework enables well-regulated commercial chartering. Ganna Shamayeva, Operations Manager at SOS Yachting dives into the core requirements for chartering these francophone waters in 2025.

France and Monaco remain among the most prestigious and in-demand destinations for yacht charters in the Mediterranean. Their appeal lies not only in glamorous ports and scenic cruising grounds but also in a stable legal framework that enables well-regulated commercial chartering. However, operating in French and Monégasque waters requires strict compliance with VAT legislation and administrative procedures. Whether EU or non-EU flagged, all commercial yachts must follow one of several clearly defined pathways to operate lawfully says Ganna Shamayeva, Operations Manager at SOS Yachting. She lists the core requirements for chartering in France and Monaco in 2025.

All commercially registered yachts regardless of flag or size are eligible to charter in France and Monaco. That said, this eligibility comes with obligations. EU-flagged yachts must maintain VAT-paid status and be able to provide supporting documentation such as a VAT-paid certificate. For non-EU flagged yachts, compliance takes one of three possible paths:

1. Importation & VAT Reverse Charge (FRC)
   Non-EU commercial yachts must be imported into the EU and placed in free circulation. France simplifies this process with the automatic VAT reverse charge mechanism (FRC), which eliminates the need for upfront VAT payments. Once French VAT number has been obtained and the yacht is imported, the owning company must declare and deduct VAT in its French VAT return for the corresponding month, ensuring the yacht is considered "VAT accounted for."

2. Temporary Admission under the YET Regime
   Under the Yachts Engaged in Trade (YET) scheme, pleasure non-EU flagged yachts may operate in French/Monegasque waters without formal importation — if specific conditions are met. These include:

   • Registration under Cayman or Marshall Islands

   • Non-EU residency of the UBO, Owning company and main charterers

   • Full compliance with commercial vessel requirements

   Albeit not mandatory, a customs declaration of temporary admission is strongly recommended.

3. VAT-Paid Status
   Alternatively, a yacht can settle VAT on its value either on the initial purchase, or directly with French or another EU member state customs. This allows for fluid movement in and out of EU waters and simplifies the transition between commercial and private use.

VAT Representation Requirements

Owning companies are required to register for VAT in France or Monaco. EU-based companies may appoint a VAT agent, while non-EU companies must appoint a VAT representative, who assumes legal responsibility for compliance. In both cases, responsibilities include:

• Obtaining a French VAT number

• Filing monthly VAT returns

• Collecting and remitting VAT

• Issuing compliant invoices for charter and APA

SOS Yachting France supports clients throughout this process.

VAT applied to charter fees

French VAT at the full rate 20% applies to charters starting in France or Monaco, based on the portion of the itinerary spent within EU waters. If part of the charter occurs outside EU territory, a proportional VAT exemption may apply but this requires robust documentation, including AIS data. Note that delivery and re-delivery fees remain fully taxable.

Charters originating outside the EU (e.g., from Montenegro or Albania) do not incur French VAT for the leg spent entering French waters, although VAT may be due in other EU countries visited along the route.

UBO Use & Fiscal Impact

The Ultimate Beneficial Owner (UBO) may use the yacht, provided a charter contract is in place. From a tax perspective, neither income tax nor withholding tax applies unless the owning company has a permanent establishment in France or Monaco. Nevertheless, both the company and its VAT representative remain responsible for VAT collection and payment.

France and Monaco offer world-class cruising experiences but navigating their tax systems requires accuracy, planning, and local expertise. Whether via full importation, the YET regime, or VAT-paid status, compliance is key to smooth and lawful operations.

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